Like many things to do in the new year, it is time to sit down and review your property’s many filings and agreements.

Are all your required filings (fire department, police department, municipality, insurance company, etc.) up to date? Are you sure your Insurance covers you for replacement value and up to code losses?

Often overlooked, with devastating impact on an owner, are management contracts with your management company. Do not forget any contracts you may, or should have with your employees.

Management contracts can be as simple as a two-page letter of understanding to a complicated 20-plus page, written agreement. Obviously, if you self-manage your property, your emphasis should be on employee contracts. Have you done background checks on them? Do they have criminal records that may affect their responsibilities and subject you to a law suit? Do they have financial problems that may affect their overall judgment and affect your relationship with tenants or other employees? In our litigious society, it is as good a time as any to discuss your employment matters with an employment attorney to make sure you do not violate any laws or rules, and to make sure you are protected. Your insurance company may have guidelines or classes (workplace violence, harassment classes) or courses or materials to go over with employees.

Written management contracts are essential between owners and their management companies and staff and, like you should be doing with your employees, a detailed background check on your management company and employees is essential. The Internet is a powerful assistant in any background search you may undertake. A blocked social website may mean bad or inappropriate behavior. Police and fire departments require their candidates to open their social media accounts for review.

Items of importance in a management contract include, but should not be limited, to:

1. Specific details as to the responsibilities of each party. As to:

    a. The length of the contract. Always avoid automatically renewing contracts, of any kind.

    b. What are the manager’s fees for their management or rental duties.

    c. Set limits on size of a contract or a check that the manager can enter into or sign without your authority.

         i. Even though they should provide you every month with copies of any agreements or checks they entered into or signed, regardless, you should demand to know before they are signed or entered.

         ii. Perhaps a $1,500 limit on checks, unless in the regular course of business, like payroll or monthly service contracts.

                   • In today’s day and age, anything can be anywhere by overnight delivery in a day or reviewed by you moments after sent by e-mail. It takes only a few moments to review but hours to deal with lost, stolen or missing money.

    d. Who handles common charges or other pass along billing to tenants for the premises, if any.

    e. Advertising parameters and billing requirements for events.

    f. Rental and renewal parameters.

    i. Don’t forget your lender may have specific requirements you must meet.

    g. Parameters as to entering any contracts with outside vendors and providers.

         i. If you’re not interested in seeing them you should have a designated party (lawyer, senior VP, etc.) review them before signed.

         ii. Supervisory responsibilities over those outside vendors and providers.

         iii. Do you have a W-9 on file?

         iv. Do you have a current copy of their insurance and has the policy been verified?

    h. Duties and responsibilities as to hiring, firing or managing employees.

    i. Responsibilities as to ordering and supervising repairs and services and their providers as the work is done.

    j. Reports and notices.

         i. Old fashioned mail/e-mails.

    k. Where (if at all) are security deposits are to be deposited, and maintained?

    l. What is the amount of the reserve fund, if any? And where is it on deposit?

    m. Responsibility for required disclosures to tenants, suppliers, etc. (if any).

    n. Who is responsible for obtaining and making sure all permits are current?

    o. Who keeps track of and annually shops insurance policies and other annual contracts to compare pricing?

Also, include:

2. Specific contact people for each side for any designated or specific issue or emergency.

3. Excellent insurance naming you, the owner, and any individuals involved as additional insureds for any negative or negligent acts or actions by the management company.

4. Is your money in a segregated account?

    a. Do you have instant access to the information?

    b. When and how will you receive your money?

    c. Does the management company stay current on the latest tools, such as automatic check machines? As a note, this author still believes that hand delivery of checks and important information to banks is the safest course of conduct.

    d. Is your information properly stored?

         i. Hard copies in fireproof safes or filing cabinets only.

         ii. Everything backed up multiple times and every day.

    e. Is the management company safeguarding all personal information that they have on your tenants as well? If not, you can be held responsible for breaches or theft of that information.

    f. Is your money insured–by both the managements’ insurance policy and banks’–while being held by the management company?

5. Are you assured exactly who and what credentials your specific property manager (now or in the future) will have?

    a. If you require or want someone specific, that must be indicated.

6. How are notices given between the parties?

7. Fees and responsibilities for overseeing improvements or repairs?

    a. For owner vs. tenants.

This is a semi detailed list of items to be considered in any management contract. Consult your attorney immediately to discuss. If any of these are not in your current contract, move immediately to rectify that. Like any good athlete, it is not unfair for you to request mid-contract modifications if the management company doesn’t want you to be a free agent at the end of the existing contract, if there is one.

Happy New Year.

Howard Stern, Esq., is the owner and an attorney at Law Offices of Howard Stern, White Plains, N.Y.

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